RBI Reportedly In Talks With Four Public Sector Banks To Launch Digital Currency This Year

India¡¯s central bank, the Reserve Bank of India (RBI), has reportedly asked four public sector banks to run a pilot Central Bank Digital Currency (CBDC) project ahead of a possible rollout in this financial year. RBI is also said to be holding consultations with a clutch of fintech companies.

The list of fintechs include US-based FIS which has been holding roundtable conferences and workshops with central bankers globally on CBDCs, as per a Money Control report.

¡°FIS has had various engagements with the RBI...and, of course, our connected ecosystem could be extended to the RBI to experiment various CBDC options,¡± said Julia Demidova, senior director at FIS.

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The fintech company is advising central banks on CBDC topics such as offline payments, programmable payments, new monetary policy toolkit, interest-bearing CBDC, fractional banking issues, financial inclusion, and cross-border CBDC payments, Demidova said, adding that ¡°Whether it is a wholesale or retail CBDC transaction, our technology can also be extended to commercial banks where they can test and tokenise central bank money in the form of digital regulated money.¡±

PSU Banks Involved In Roll Out

The RBI has roped in four state-run banks to run a pilot CBDC project, according to two bank officials. ¡°The RBI has asked State Bank of India, Punjab National Bank, Union Bank of India and Bank of Baroda to run the pilot internally,¡± the official said, requesting anonymity, as per the report.

Another senior PSU bank official reportedly confirmed the matter saying, ¡°There is a pilot on CBDCs. The RBI may come with the launch this year. When it will exactly roll out the product and specifications is to be seen.¡±

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RBI Act Amended For Digital Currency Launch

On July 20, 2022, Ajay Kumar Choudhary, executive director at RBI, reportedly said that with the announcement of the CBDC launch in the Union Budget, the RBI Act of 1934 had been amended to enable the RBI to conduct the pilot project and subsequently issue the CBDC.

¡°The RBI is also working on a phased implementation of a CBDC in both the wholesale and retail segments,¡± he added.

His comments are in line with Finance minister Nirmala Sitharaman¡¯s statement earlier on March 8, 2022, when she was quoted by PTI as saying, ¡°It was a conscious call taken in consultation with the central bank ¨C the Reserve Bank of India.... we would like them to design it the way they would like to do it, but this year we expect the currency to come out from the central bank itself.¡±

As per the report, India¡¯s finance minister had also said there are ¡°clear advantages in a central bank driven digital currency because in this day and age, bulk payments happening between countries, large transactions between institutions and large transactions between central banks themselves of each country are all better enabled with digital currency.¡±

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